EU toughens Brexit transition demands

The EU is demanding the U.K. not take “any action or initiative … likely to be prejudicial” to the bloc’s interests in any international body or forum during a Brexit transition period, according to draft legal text prepared by the European Commission.

The provision is part of a document, seen by POLITICO, in which the EU set out its updated terms for a 19-month transition period after the U.K. formally leaves the bloc in March 2019.

These terms, which the U.K. is yet to agree to but has little leverage to negotiate, include a tighter definition of Britain’s minimal influence over EU decision-making and a new provision that will restrict the U.K.’s ability to prevail in disputes over aspects of the single market.

As expected, the draft transition agreement includes the EU’s main condition: a requirement that the U.K. abide by all EU laws and obligations, even as it loses all voting rights and representation in Brussels.

According to the text, the EU would be required to consult London — but not necessarily act on the U.K.’s input — only in regard to setting new fishing quotas. On other issues, such as sanctions policy, and issues directly affecting the U.K., the EU may consult Britain but would be under no obligation to do so — a flat dismissal of U.K. negotiator David Davis’ demand for some recourse mechanism over new EU policies that Britain might oppose.

“We will have to agree a way of resolving concerns if laws are deemed to run contrary to our interests and we have not had our say,” said Davis in a speech on the U.K.’s view of a transition period last month.

The five-page document, which was discussed by the EU’s College of Commissioners in Strasbourg Tuesday and then circulated among EU27 diplomats, includes updated language and new provisions that were not in previous draft negotiating directives agreed by EU ministers last month.

Among the most notable is the clause curtailing the U.K.’s actions on the world stage. It states: “The United Kingdom shall abstain, during the transition period, from any action or initiative which is likely to be prejudicial to the [European] Union’s interests in the framework of any international organization, agency, conference or forum of which the United Kingdom is a party in its own right.”

Interpreted strictly, it would bar the U.K. from taking any position at the United Nations, the World Trade Organization or in the G7 or G20 clubs of world economic powers that run counter to the EU’s wishes.

The draft legal text also suggests that the U.K. will find itself on the losing end of any disputes within the EU’s single market. A footnote states that the final withdrawal and transition agreement “should provide for a mechanism allowing the [European] Union to suspend certain benefits deriving for the United Kingdom from participation in the internal market” in the event that referring a complaint to the European Court of Justice would not yield a remedy in time.

In other words, while the U.K.’s exit might be imminent, it will not be allowed to violate EU market rules and then use judicial delaying tactics to avoid any sanction. The draft text confirms the ECJ will retain jurisdiction over the U.K. throughout the transition — something Prime Minister Theresa May conceded back in October.

One EU official who has seen the text played down the draconian nature of the clause: “The mechanism has not been identified yet, it will be a part of our internal discussion but it will also be discussed with London. We cannot impose it to the U.K.” The official added that the types of cases it would apply to have yet to be identified.

The draft’s tightly written legal language makes clear just how powerless the U.K. will become in EU matters during the transition. For example, it states: “For the purposes of the treaties, during the transition period, the parliament of the United Kingdom shall not be considered to be a national parliament.” It also states, “during the transition period, the Bank of England shall not be considered to be a national central bank.”

Those provisions are practical measures, not political jabs, stripping the U.K. of standing that the parliaments and central banks of EU27 nations would have under EU law.

But they are likely to be particularly inflammatory for Brexiteers. Jacob Rees-Mogg, Tory backbench MP and leader of the Euroskeptic European Research Group, has argued that the terms of a transition period are so restrictive they make the U.K. no more than a “vassal state.”

Rees-Mogg said on Tuesday evening that the legal text as drafted was “not something that we can accept.”

Speaking in Westminster, he raised particular objection to the provisions on the authority of the ECJ, which he said would enable the EU to “punish us” without the U.K. being able to plead its case in the EU’s highest court in Luxembourg.

“I don’t want us to accept the ECJ in the implementation/transition period anyway, but if we do, they must as well,” he said. “To say ‘we can have extraordinary powers to do what we like, when we like it’ seems to be against the rule of law and therefore against the EU’s own Charter of Fundamental Rights.”

A U.K. government spokesperson said: “This is a draft document produced by the EU that simply reflects their stated directives. The secretary of state set out the U.K.’s position in his speech in Teesside last month. Together these provide a solid foundation for the negotiations on the implementation period, which have begun this week with the aim of reaching agreement by March European Council.”

The draft text must still be negotiated and agreed by the U.K., but officials in Brussels have made clear that they have little appetite for haggling. Britain has virtually no leverage if it wants the transition period — which experts say is crucial to avoiding a shock to the U.K. economy — to be agreed swiftly. May, who refers to the transition as an “implementation period,” has described it as essential.

The draft text, as expected, calls for the transition to last from the official Brexit date of March 29, 2019, until December 31, 2020 and it makes no mention of any possible extension, though nor does it exclude the possibility.

But the text does give at least one nod to May’s suggestion in her speech in Florence that aspects of the future relationship between the U.K. and the EU might be fast-forwarded during the transition. The draft includes a provision allowing for a new agreement “in the area of common foreign and security policy,” and in defense matters, to supersede existing provisions of the EU treaties.

On virtually all other matters, the U.K. will continue to be bound by the treaties, as well as by all of the EU’s existing international agreements, even as it must wait to implement any of its own new deals. On trade agreements, for instance, the U.K. will be required to fulfill the obligations of all existing EU accords but cannot become bound by its own new trade agreements, or any other legal agreements, until the transition ends.

An EU official working on Brexit, who has seen the text, played down the changes from previous versions. “In general, it seems that it reflects what has been adopted by ministers in the negotiating directives, there should be no surprises, really,” the official said.

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